10436. (Amended by Stats. 2026, Ch. 25, Sec. 37.)

(b) (1) The Department of Finance and the Department of General Services shall approve or disapprove annual contract funding terms and conditions, including both family fee schedules and rate schedules that are required to be adhered to by contract, and contract face sheets submitted by the department not more than 30 working days from the date of submission, unless unresolved conflicts remain between the Department of Finance, the department, and the Department of General Services. The department shall resolve conflicts within an additional 30-working day time period. Contracts and funding terms and conditions shall be issued to childcare contractors no later than June 1. Applications for new childcare funding shall be issued not more than 45 working days after the effective date of authorized new allocations of childcare moneys.

(2) If the market rate survey is used to set reimbursement rates, and notwithstanding paragraph (1), the department shall implement the regional market rate schedules based upon the county aggregates, as specified in Section 10374.5 and the annual Budget Act.

(3) It is the intent of the Legislature to fully fund the third stage of childcare for former CalWORKs recipients.

(c) With respect to subdivision (b), it is the intent of the Legislature that the Department of Finance annually review contract funding terms and conditions for the primary purpose of ensuring consistency between childcare contracts and the childcare budget. This review shall include evaluating any proposed changes to contract language or other fiscal documents to which the contractor is required to adhere, including those changes to terms or conditions that authorize higher reimbursement rates, modify related adjustment factors, modify administrative or other service allowances, or diminish fee revenues otherwise available for services, to determine if the change is necessary or has the potential effect of reducing the number of full-time equivalent children that may be served.

(d) If an alternative methodology, as defined in subdivision (ak) of Section 10213.5, is used to inform the setting of reimbursement rates for subsidized childcare, the department may contract to develop and conduct an alternative methodology to set reimbursement rates for subsidized childcare, subject to prior approval by the United States Department of Health and Human Services, Administration for Children and Families, no less than every three years and no sooner than two years prior to the submission of the Child Care and Development Fund (CCDF) Plan. If the department does not use an alternative methodology and the market rate survey is used to set reimbursement rates, alternative payment programs, as set forth in Chapter 3 (commencing with Section 10225), shall be subject to the rates established in the Regional Market Rate Survey of California Child Care Providers for provider payments, and the department shall contract to conduct a regional market rate survey once every three years, consistent with federal regulations, with a goal of completion by March 1.

(e) By March 1 of each year, the Department of Finance shall provide to the department the state median income amount for a four-person household in California using the methodology provided in subdivision (c) of Section 10271.5. The department shall adjust its fee schedule for childcare providers to reflect this updated state median income, and changes based on revisions to the state median income amount shall not be implemented midyear.

(f) Notwithstanding the June 1 date specified in subdivision (b), changes to the regional schedules and fee schedules may be made at any other time to reflect the availability of accurate data necessary for their completion, provided these documents receive the approval of the Department of Finance. The Department of Finance shall review the changes within 30 working days of submission and the department shall resolve conflicts within an additional 30-working day time period. Contractors shall be given adequate notice before the effective date of the approved schedules. It is the intent of the Legislature that contracts for services not be delayed by the timing of the availability of accurate data needed to update these schedules.